ADNOC is one of the world’s leading energy providers based in Abu Dhabi, the capital city of the UAE. ADNOC is a catalyst for growth and diversification in the Emirate and is committed to driving forward socio-economic objectives.
What is ADNOC ICV – In Country Value?
The ADNOC company has launched an in-country value (ICV) program which is currently in its implementation stage. The program aims to drive optimal value from oil and gas reserves, increasing the ICV contribution and supporting the private sector to support growth and diversification of the UAE economy.
The procurement-led initiative for ADNOC’s suppliers will focus on three key areas; diversification through expenditure on local goods and services; personal development for UAE Nationals in the private sector and localisation of capabilities for critical supply chain functions within the industry. The ICV program offers suppliers new opportunities to conduct business with ADNOC group.
ADNOC’s capital spend over the next five years will generate opportunities for companies to grow alongside ADNOC, as international companies work more closely with SMEs to maximise use of local products, manufacturing, services and infrastructure.
As part of ADNOC’s ICV program, all ADNOC suppliers are required to declare their ICV achievement (ICV Certificate) and their certified ICV score for the previous financial year, demonstrating how they are helping to deliver ICV. Business partnerships with ADNOC include an ICV assessment as part of the tender evaluation and award process.
The evaluation will examine the capabilities of the business within the UAE in areas including; Export of goods manufactured in the UAE; Third party spend (Procurement of goods and Sub-contractors); Local investment; Emiratization of workforce and Expatriate contribution.
Suppliers will be required to complete the Supplier Submission Template and approach one of the ADNOC certification bodies to obtain their ICV certificates. The ICV audit will have to be undertaken by an authorised local audit firm.
Having a set up as a local Abu Dhabi LLC UAE Company with a 51% shareholder will increase your ICV score, although it will be necessary to obtain the ICV report for the 51% shareholder to get the full benefit. This is where using a corporate shareholder such as PRO Partner Group can assist. PRO Partner Group (PPG) already has full ICV registration and as such we can assist foreign companies in providing our own detailed ICV profile to combine with theirs.
For a 100% foreign owned Foreign Branch set up onshore, PRO Partner Group can act as the sponsor of the Branch. From preliminary discussions and detailed ICV scores to date it would appear that setting up as an LLC will generate a higher overall ICV score than a Foreign Branch, all other factors being equal, this is dues to the LLC being a true local UAE Company. It may be that some companies set up as a Foreign Branch at this stage may wish to transition to a full LLC if ICV is a significant consideration. There is a process to turn a Foreign Branch into an LLC – PPG can assist with this process and can additionally act as the 51% Local Corporate Shareholder, provide ICV support whilst ensuring the foreign company retains effective 100% control of all aspects of the Local LLC. Please contact a member of the Abu Dhabi team for further information.
ADNOC will continue to develop the ICV strategy by various initiatives to include; working with suppliers to develop their long-term ICV strategies, identifying appropriate categories for which only SMEs will be invited to tender and facilitating training workshops for Emiratis to increase employability.
ADNOC’s ICV strategy is an extension of its 2030 growth strategy to “create a more profitable upstream and more valuable downstream business, as well as ensure an economic and sustainable supply of gas.”
PRO Partner Group facilitates all the procedures and legalities involved in establishing and maintaining a commercial entity in the UAE, from Commercial Registration to Professional Corporate Nominee Services and Visas, Work Permits, CICPA Passes and more. Having assisted in the formation of over 400 companies in the Middle East, PRO Partner Group enable more businesses to capitalise on the regions prosperous economy.
For more information about ADNOC ICV Program, ADNOC and Supreme Petroleum Council (SPC) Approval as well as conducting business in Abu Dhabi, Licencing matters and PRO Services, please contact PRO Partner Group Abu Dhabi on +971 (0)2 448 5120 or email firstname.lastname@example.org
— PRO Partner Group (@PROPartnerGroup) November 5, 2018
The Abu Dhabi Department of Economic Development (DED) has launched the first phase of its Dual Licence Initiative (DLI) announcing that companies operating in an Abu Dhabi free zone will be permitted to operate in both the capital’s free zones as well as establishing an onshore branch. The introduction of a dual licence will expand where companies can conduct business and improve the emirate’s competitiveness.
Aiming to attract foreign investment and drive forward the economy, the dual licence is part of the Dhs 50bn stimulus package announced in June (more info here https://www.propartnergroup.com/2018/07/abu-dhabi-economic-growth-investments/) This new dual licence initiative was welcomed by many in the emirate, benefiting numerous industry sectors to include services, trading, FMCG and financial consultancies.
In the first instance, the dual licence will be open to those companies headquartered in Abu Dhabi and based in one of its free zones, which include media zone Twofour54, Abu Dhabi Global Markets (ADGM) and Khalifa Industrial Zone (KIZAD) and the Abu Dhabi Airport Freezone and MASDAR. Companies under the licence can operate in Abu Dhabi, Al Ain and Al Dhafra regions. A second phase will be introduced, allowing more businesses to be eligible for the dual licence.
The dual licence will allow free zone companies looking to operate onshore and obtain a full DED licence without leasing a separate office onshore (the Freezone office will count against the licence) and without engaging a new local partner or sponsor (the Freezone will in effect become the sponsor).
Dual licensing will be available to LLC companies that are registered in one of Abu Dhabi’s free zones, it will not apply to entities registered as a Foreign Branch in such free zones. Note that Special Purpose Companies (SPCs or SPVs) will not be able to branch onshore.
The dual licence branch will not be issued with its own Establishment card or Ministry of Labour file and it will be the responsibility of the parent company in the Freezone to sponsor dual licence branch employees. Therefore employees may not obtain a full onshore work permits and visa allocation will count against the office space visa quota allocation within the Freezone. It is unclear at the moment as to whether the dual licences will qualify for certain regulatory approvals onshore, such as Oil & Gas, Health Authority, Education, Training and other similar requirements.
The initiative is part of the Department of Economic Development’s efforts in improving the ease of doing business in Abu Dhabi. It was reported in 2017 that the United Arab Emirates was ranked at 21 (the index ranks economies from 1 to 181, with first place being best) according to the World Bank collection of development indicators. Further, by encouraging companies to expand their work outside of free zones, the dual licence will increase contribution to the economy.
According to Abu Dhabi DED, companies who are eligible for the licence will need to present a non-objection certificate from their free zone to state that they do not have any other branches outside of the free zone as well.
It will be compulsory to appoint a manager of the dual licence branch. A power of attorney in favour of the manager will also be necessary to ensure the manager has sufficient authority to act on behalf of the dual licence branch. The name and activities of the onshore branch will need to match the Freezone company.
The approval process can take anywhere between 20 minutes and 2-3 days, if further approvals are required, dependent on the business activities. The cost of the dual licence is reported to be 80 per cent less than a standard licence.
The Dual Licence Initiative (DLI) aims to provide a more streamlined approach for free zone companies to operate onshore and to alleviate the costs and restrictions associated with onshore expansion. The DED has indicated that the second phase of DLI is underway and will aim to extend the eligibility for dual licences to a more diverse assortment of company types in the future.
Abigail Cuthbert is Operations Manager at PRO Partner Group in Abu Dhabi. PRO Partner Group provide Government Liaison and PRO Services, secure Local Sponsorship and advice on all Licencing and Corporate Matter to foreign companies and investors in Abu Dhabi, Dubai and the wider UAE.
For more information on the dual licence and application process or any other PRO or Licencing inquiry please contact Abigail at PRO Partner Group Abu Dhabi on +971 (0)2 448 5120 or email@example.com.
— PRO Partner Group (@PROPartnerGroup) November 4, 2018
The requirement to show AED 150,000 for Investor Visa Approval has been removed
Abu Dhabi Department of Economic Development – AD DED – are now fully integrated with the General Directorate of Residency and Foreigners Affairs – GDRFA – (Immigration Department) – the requirement to show AED 150,000 for Investor Visa Approval has been removed.
When applying for a trade licence in Abu Dhabi it was previously a requirement for individual foreign investors to show that they had AED 150,000 in a personal UAE bank account or that the company had AED 150,000 in a UAE business account to allow the individuals to be approved for an Investor Visa to hold shares in an Abu Dhabi Company.
AD DED has now removed this requirements and integrated the investor approval stage within the Initial Approval and Company Trade Name Reservation process.
At the Trade Name reservation stage the individuals are also registered with GDRFA and Investor Visa Approval is obtained at this stage. It takes about 7-10 working days to obtain the investor visa approval subject to security clearance checks – there is a small additional fee of AED15 for this process.
Once Investor Visa Approval is obtained, the company than then progress to Notarise the incorporation documents (MOA or NSA), rent a suitable commercial space and then obtain the full DED Trade Licence.
This applies to LLC companies (where foreign individuals hold shares in the 49%), or Professional Licences (Sole Trade / Establishment Licences) where the foreign person is the 100% owner, with a National Service Agent (NSA).
The DED System is now also linked directly with the Ministry Of Human Resources & Emiratisation – MHRE (Ministry of Labour) – and the company will obtain its registered Labour number after obtaining the DED Trade Licence. This file number is used for all staffing matters such as the Wage Protection System (WPS) and applications for Labour Quotas. Both the MHRE and GDRFA numbers will now be shown on the DED licence along with the Chamber of Commerce number.
The integration of these systems will significantly speed up the company formation time lines and the removal of the requirement to show AED 150,000 in a UAE bank account has removed a complicated hurdle in the process, this step was often a ‘chicken and egg’ issue where the individual could not open a bank account without the visa, but needed the account to obtain the visa. The AED 150,000 deposit requirement for investor/partner visas was removed in Dubai some time ago so this also brings Abu Dhabi in line with Dubai DED in this respect and will certainly significantly improve the process in the Emirate.
James Swallow, Commercial Director at PRO Partner Group. For any further details on these changes and for assistance with Company, Branch or Professional Licence formation in Abu Dhabi and the Investor Visa Process please contact James or a member of the Team at PRO Partner Group Abu Dhabi on
#AbuDhabi Department of Economic Development – #ADDED – are now fully integrated with the General Directorate of Residency and Foreigners Affairs – #GDRFA – the requirement to show AED 150,000 for #InvestorVisa Approval has been removed. https://t.co/muw0N7fTnV
— PRO Partner Group (@PROPartnerGroup) August 29, 2018
RAK EZ Introduces Freelancer Visa in the UAE
The Emirate of Ras Al Khaimah is a leading business destination within the UAE offering a wealth of opportunities to free zone and non-free zone businesses. The emirate is situated in the east of the Persian Gulf and is the northernmost emirate of the UAE.
Ras al-Khaimah has a population of about 250,000 inhabitants and has become a true trading and industrial hub with a growing and thriving economy. Global ratings agency S&P estimates real GDP growth of 2.5 per cent for Ras Al Khaimah in 2018 as compared to 1.5 per cent last year.
Based in the heart of Ras Al Khaimah, an economic authority was established in 2017 – Ras Al Khaimah Economic Zone (RAK EZ). This authority was set up to oversee the and consolidate the specialised zones and clients of the two fast-growing free zones in the UAE: RAK Free Trade Zone and RAK Investment Authority.
RAKEZ offers clients and investors a cost-effective solution with customisable packages and services allowing freelancers flexible working solutions. RAK EZ connects investors to growing markets of the Middle East, North Africa (MENA), Europe as well as South and Central Asia. It is currently the preferred business destination of more than 13,000 multinational companies, from freelancers to SMEs.
Recently the Freelancer Permit was introduced by RAKEZ to help sole practitioners and offer more possibilities to those freelancers working in media and education.
The permit starts from AED 6,100 ($1,660) exclusively to media and education professionals covering various activities. The package includes a two-year UAE visa as well as access to a shared workstation and premium services. The freelancer permit will need to be renewed every year.
Benefits of RAKEZ include; shared and furnished workstations, secretarial and business centre services, advanced IT/telecommunication infrastructure, simplified and fast track permit issuance, first-class services in one-stop shop and eligibility to apply for a UAE Residence Visa.
RAKEZ Terms & Conditions (RAK Website)
- A Freelancer is athe professional who will operate as an independent contractor and in the form of a sole practitioner to undertake the permitted business from RAKEZ
- A Freelancer shall conduct business in his/her own birth name as opposed to a company name
- It is optional for UAE residents (GCC and Non-GCC Nationals) to take RAKEZ visa sponsorship. Existing sponsor’s NOC has to be provided if a client opts for a permit without visa
- Freelancers shall not be eligible to open a Corporate Bank Account (only a personal bank account is possible).
- No Memorandum of Association, Certificate of Incorporation or Partner list shall be issued under the Freelancer Permit
- Freelancers are personally liable for any debts and other obligations the Freelancer may incur in carrying out his/her work
- Freelancers shall not be eligible to appoint any staff or obtain additional visa under the permit
- The Freelancer can select only 1 activity per Permit
Documents required to apply include; application for registration and permit with proposed activity (only 1 activity is permitted), valid passport copy and photo, CV, business plan detailing the proposed business, two professional references with contact details or letter of intent from a potential business partner stating their interest in working with you as a freelancer, visa undertaking letter and signed sponsorship agreement (upon issuance of permit)
The approximate duration for issuance of Freelancer Permit is 2-3 days upon submitting the full set of application, settling the required payment and receiving the pre-approval from the Immigration.
More About RAKEZ
RAKEZ is committed to its promise of empowering clients and investors by offering a cost-effective and world-class economic zone with customisable packages and services as well as state-of-the-art facilities. Blessed with a strategic location, RAKEZ connects investors to growing markets of the Middle East, North Africa, Europe as well as South and Central Asia.
Mission: Develop fit-for-purpose infrastructure and smart customer-centric business solutions enabling a comprehensive commercial, trade and manufacturing hub that helps our customers grow and attract diversified investments
For more information on company formation in the UAE and for further details and assistance with Freelancer Licences in RAK and elsewhere, please contact us on +971 (0)4 456 1761, +971 (0)2 448 51 20 or email firstname.lastname@example.org
Chloressa Khatib is the Business Development Executive at PRO Partner Group. For further information about Freelancer visa in Ras Al Khaimah Economic Zone (RAK EZ) please contact Chloressa on
email@example.com or call a member of the team on:
+971 (0)4 456 1761 (Dubai)
+971 (0)2 448 5120 (Abu Dhabi)
— PRO Partner Group (@PROPartnerGroup) August 26, 2018
Abu Dhabi expands company ‘Tajer Licence’ to boost economic growth
The Tajer Licence (or ‘Trader’ Licence) in Abu Dhabi was introduced last year, allowing Emiratis to establish businesses across 100 different business activities without usual requirement to rent a minimum 15 sqm commercial office. This scheme, aimed to ease business set up and reduce set up costs for small businesses and ‘freelancers’.
This ‘Trader’ or ‘Freelancer’ Licence as now been expanded to include all GCC nationals and any expat UAE residents. This is a part of the Emirate’s wider effort to diversify its economy, encouraging entrepreneurs and SMEs to set up and conduct business in the capital – effectively allowing freelancers to work remotely, work from home or use coworking or shared space.
Announced by the Abu Dhabi Department of Economic Development (AD DED), the service allows new companies to obtain a commercial licence without an office or a physical presence is part of the three-year Dh50 billion stimulus package.
This Licence does not require a lease contract (‘Tawtheeq’) or Articles of Association and is issued electronically.
In addition to the extension to all GCC nationals and expat UAE residents, the scheme has also now added further commercial activities bringing the total scope to 1,057 commercial activities.
Legal structures accepted under the Tajer Abu Dhabi licence include a one-person company for Emiratis (Establishment / Professional Licence), a one-person company for GCC nationals (Establishment / Professional Licence), and Establishment/Professional Licence or Limited Liability Companies (LLCs) for foreign national residents in partnership with Emiratis or an Emirati Company. Note that Foreign Nationals will still need to partner with a local UAE individual or UAE Company in the case of an LLC or obtain a National Service Agent (Sponsor) in the case of an Establishment, Branch or Professional Licence.
The overall government fees to establish the Tajer licence are lower than an Establishment / Professional Licence or an LLC but will vary depending on the activity required.
At this stage the Tajer Licence does not allow owners to apply for labour quota and to visa staff directly, staff can apply for work permit against the licence, but they must have their visa elsewhere. If the Tajer Company wants to visa staff directly it must take on office space in order to apply for the relevant labour quota.
A Tajer Licence can we converted to an ‘Establishment’ or a full LLC at a later stage if required by the owner. This allows a freelancer to set up in a low cost way using the Tajer licence initially and when the freelancer wants to expand the business, employ staff and take on a physical location it can progress to a full LLC company when commercially viable. For more information on this please contact a member of our Abu Dhabi Corporate Team on +971 (0)2 448 5120 or email us at firstname.lastname@example.org.
Entrepreneurs and SMEs will benefit from this expansion as it will mean a much lower set up cost without investment in office space. In turn, this will help economic growth in the capital which is key to the strategic vision.
The ‘Golden Package’ of Tajer Abu Dhabi incorporates activities under multiple categories including general consultancy, trading, services, design and management – certain regulated activities will be restricted to full LLC Licences.
The Department of Economic Development are confident that the licence will support the significant development of businesses selling online and via social media, allowing companies to transact, import and export as well as open bank accounts and work with government organisations.
Moving into a digital world and ensuring that Abu Dhabi is at the forefront of this movement, the initiative will help to increase the speed of set up and drive cost efficiencies – the majority of the applications and paperwork will now be through the DED online portal. The ADDED, and Abu Dhabi’s Smart Solutions and Services Authority (ADSSSA) have implemented the new “Tamm” system (or ‘Done’ System) – The Tamm system will shorten the process of obtaining an economic licence from eight steps to only one step, without the need to physically visit the government departments. Particularly the system proposes to skip the Notary signing stage once the user is registered on the system – transactions than them be undertaken wholly online.
The scheme was expanded due to high demand in the first phase whereby the department issued 1,800 licences in the first six months. It is reported that SMEs contribute to more than 60 percent of gross domestic product and the UAE aims to grow this figure to 70 percent by 2021.
According to figures from the Statistics Centre Abu Dhabi (SCAD), 2017 saw a total of AED 108bn in Foreign Direct Investment (FDI) into the UAE capital, a 7.1 percent increase compared to AED 100.88bn recorded in 2016.
Abu Dhabi will benefit from these changes and this will significantly improve the speed, costs and efficiency for SMEs and Entrepreneurs to do business in Abu Dhabi and encourage an ecosystem in which the government and private sector are brought closer together.
More about PRO Partner Group Abu Dhabi
PRO Partner Group assist with all the relevant company formation and corporate structuring assistance and advice. PRO Partner Group can also act as the secure local partner or corporate sponsor (NSA) for an Establishment, Branch or LLC and provide PRO services and Government Liaison support to the company. This allows clients to retain full effective control of their business and takes away pressure to independently find and maintain a trustworthy local sponsor relationship.
Audrey Haution is the Business Development at PRO Partner Group. For further information on PRO Partner Group’s comprehensive range of market entry services or questions relating to company set up in the UAE, contact Audrey on email@example.com or call a member of the team on:
T: +971 (0)4 456 1761 (Dubai)
T : +971 (0)2 448 5120 (Abu Dhabi)
— PRO Partner Group (@PROPartnerGroup) August 26, 2018
Company formation in Dubai
Dubai is one of the world’s most exciting and developed business hubs, with a hugely diversified and dynamic Economy. This cosmopolitan city has seen huge growth across many sectors and the government have continued to invest in strategic infrastructure and transportation projects to support the development.
Dubai Statistics Centre (DSC) has revealed that Dubai’s real gross domestic product (GDP) reached Dh389 billion in 2017 compared to Dh379 billion in 2016, an increase of 2.8%. It is also expected that there will be further uplift in 2018. It is also predicted that the economy is expected to grow 3% in 2019, according to World Economic Outlook (WEO) of the IMF.
The UAE has the advantage of its location and therefore connections between the East and the West, making Dubai easily accessible to Europe, Asia and Africa for both travel and trade.
It is because of this, as well as other benefits, that Dubai was elected to host Expo 2020; a gathering of minds to share ideas, showcase innovation and celebrate human integrity under the main theme, “Connecting Minds, Creating the Future.”
Construction activity in Dubai will remain robust with developments related to the Expo being one of the main driving factors behind the sector’s growth. In addition, there are plans in place to support other non-oil sector with increases seen recently in travel and tourism as well as wholesale and retail sectors.
Dubai’s non-oil private sector grew faster in the first half of the year as compared to the same period last year, according to reports by Emirates NBD, 2017.
This prosperity as well as future planning, puts Dubai on the map as an attractive market for foreign investors to set up companies and conduct business.
The most common industries that offer opportunity for those looking to trade in the UAE include; Interior Design, Energy & Power, Engineering & Construction, E-Commerce, IT Consultancy, Hotel & Restaurant, Real Estate and Healthcare.
Growth can be predicted across Dubai due to the booming commercial sector and a rising number of retail and residential projects across the country. A report from INDEX, the Middle East & North Africa’s largest gathering for the design community, outlines that the GCC Interiors & Fit-Out market is currently valued at US$9.04bn and represents a growth of 4.42%. – How to set up an Interiors Company in the UAE – Dubai & Abu Dhabi?
Energy & Power
Due to a rise in population, an expanding economy and climatic considerations, demand for electricity and water continues to grow at a fast pace in the UAE, at around 9% annually. Between 2008 and 2012, electricity capacity grew by 37 per cent, with Dubai increasing capacity by 44.5%. A report from Middle East Electricity (MEE), the region’s leading annual international trade event for the power industry, states the GCC, requires a combined US $131 billion worth of investment in electricity generation, transmission and distribution over the next five years to cope with the increasing demand.
This will provide significant investment opportunities, contribute to the growth of the green economy, and create a competitive advantage in the UAE for clean energy and energy efficiency.
Engineering & Construction
The construction market is currently booming in Dubai and is predicted to grow in 2018 in the lead up to Expo 2020. Research recently carried out showed that 38% of respondents expect the sector to provide the most opportunity over the next 12 months, compared to 35% in 2016 (Pinsent Masons’ GCC Construction Survey). It is reported that Infrastructure spending will rise 46.5% as the emirate prepares for construction projects related to Expo 2020, representing 21% of total expenditure in 2018. – Read here Setting up an Engineering Consultancy in Dubai
The rapid rise in internet penetration around the world is the prime driver of the e-commerce industry’s phenomenal rise. Last year was a significant year for developments in e-commerce in Dubai with growth triggered by demographics, high levels of disposable income as well as the already noted high internet and mobile penetration rates. With this evolution, came an influx of investors keen to tap into the burgeoning MENA market. According to analysts Frost and Sullivan, the e-commerce industry in the UAE is expected to hit $10bn by 2018 compared to the 2014 figures of $2.5bn, equating to a 400% growth by the end of this year.
IT is fast becoming one of the most significant growth sectors in the Middle East. Spearheaded by the governments’ focus on innovation, the Dubai tech market is expected to reach AED22 billion by 2019, according to the Dubai Chamber of Commerce.
This thriving economy has led to significant attention from investors and world leaders within the digital industry; no better example of Amazon’s recent acquisition of Souq.com (a UAE-grown online retail platform), in a deal which is estimated to be worth around $650 million. Combine this with an increase in tech-related business hubs, incubators, and accelerators, and there is a huge opportunity for IT businesses in the UAE.
Hotel & Restaurant
The UAE is without doubt one of the largest growing economies in the Middle East, with the restaurant sector seeing tremendous growth over the past few years, specifically in Dubai. According to Euromonitor International, an additional 19,000 outlets are expected to enter the Food & Beverage sector in Dubai by 2019. Dubai Tourism is targeting to bring 20 million tourists to the emirate in 2020 and the hotels room supply is set to grow by 11.1% from 2017 to 2019, in line with the Dubai Tourism aim. Understand the regulations for establishing a hotel in Dubai
The real estate sector in the UAE has long attracted developers, construction companies, investors and brokers (or agents) looking to invest in the region. Recent reports state that the market is more transparent, compared to 2016, which helps buyers and sellers to make more informed decisions, therefore, giving confidence to investors. In 2018, there will be more affordable housing options and this trend will continue to grow with the rise of expatriates moving to the UAE. Further, with predicted economic growth, the market should offer lucrative opportunities.
Healthcare is one of the fastest-growing sectors in the world and is a key contributor to the UAE economy. With ever-increasing population levels, life expectancy, and a diverse economy still comfortably outperforming more mature markets, the UAE healthcare market is sure to benefit from continued growth for the foreseeable future. Indeed, in 2016, Alpen Capital predicted growth of 12.7% per annum in the years leading to 2020 – growth significantly higher than the predicted market average. The healthcare industry in Dubai has continued to evolve and offers a range of new specialised services and treatments with a surge in new technology in this sector.
To set up in the UAE, there are several key stages involved in developing a successful entry strategy to include; in-depth market research, developing a business plan, determining the right commercial structure, understanding the laws & regulations and finally considering implications of VAT.
There are numerous legal company formation options in the UAE with the most common being a limited liability company (LLC). Below are the key legal commercial entities within the Emirate that companies can use to compare their options for setting up in Dubai.
Limited Liability Company (LLC)
Currently, the law states that most* Limited Liability Companies must have one or more local Emirati partner(s). The local shareholders are required to possess a minimum of 51% shareholding in the LLC.
- No Minimum Capital Requirement
- Statutory exemption from corporate tax
- No restriction on repatriation of capital and profits
- It is mandatory for an LLC to have a suitable office space prior to obtaining a Trade License. The profit share for the company does not need to reflect that of the shareholding
* Certain activities such as Recruitment Services or Real Estate Related Businesses are an exception to this rule, as they can only be completed by 100% locally owned entities.
A branch office in Dubai, is an extension of a foreign parent company registered outside of the UAE, it is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A Foreign Branch office may only be engaged in activities like those of its parent company.
Under Commercial Companies Act No 8 of 1984 and Ministerial Decision Number 69 of 1989, a Branch office of a foreign company does not have a separate entity. It clearly represents the parent company and carries on business under its name. The purpose of the branch office is to promote and market the products of the parent company, enters into transactions and concludes agreements in the name of the parent company, and offer services to its customers.
- Activities – The brand office is entitled to undertake the commercial activities of the parent company, although some activities are restricted
- Liability and tax – the branch office is not a separate legal entity and therefore the foreign parent company is 100% liable for the actions of the branch. The revenue of the branch will be taxable as the income of the foreign parent
- Sponsor/National Service Agent – each foreign branch office requires a local sponsor. The local sponsor has no equity participation or liability to the business, nor can the person represent the branch office or participate in its management
- Bank Guarantee – As a Foreign Branch Office there is a requirement to deposit a refundable bank guarantee of AED50,000 for the duration of the licence. This cannot be withdrawn or used as working capital
Trade Representative Office
This type of representation is useful in promoting a foreign company and introducing products to UAE companies as a non-trading ‘shop-window’. A Trade Representative Office cannot export, import or sell in the UAE. A Trade Representative Office may practice only promotional business for the products and services provided by the parent company.
- Activities – A representative office does not engage in sales, services or any type of commercial activity but only promotes/markets the activities of its parent company, gathering information and soliciting orders and projects to be performed by the head office of the parent company
- Sponsor/National Service Agent – Each Trade Representative office requires a local sponsor. The local sponsor has no equity participation or liability to the business, nor can the person represent the branch office or participate in its management
- Bank Guarantee – As a Trade Representative Office it is required to deposit a refundable bank guarantee of AED50,000 for the duration of the licence and this cannot be withdrawn or used as working capital
An attractive option for many foreign companies wishing to trade ‘onshore’ in the UAE is through the appointment of a local distributor or agent as it requires minimal investment. Such arrangements are known as commercial agency or distribution arrangements. It is advisable that a commercial agency obtains a partner to facilitate sales and distribution of products within the UAE. All products must be registered in country to be sold. Generally, the company will sell the products remotely or place a sales representative on the ground in Dubai. It is important to bear in mind that in certain industries and market sectors, to obtain a license for certain types of activities, the commercial agent must be registered with the Ministry of Economy.
Professional business is defined as “work based on investing mental talents and acquired information”. A Professional Licence/Civil Licence/Civil Company is a business for professionals in recognised fields such as doctors, lawyers, engineers and accountants. A Civil Company can only practice professional business and is 100% owned by professional partners.
An activity, involving the use of the individual’s physical or intellectual powers and effort and/or using tools/instruments with a limited capital.
- Activities – As a Professional Service Licence, the person is entitled to undertake the activities as per your qualifications/area of expertise
- Sponsor/National Service Agent – Each Professional Service Licence requires a local sponsor. The local sponsor has no equity participation or liability to the business, nor can the person represent the office or participate in its management
- A civil company for engineering – Must have one partner who is a UAE National, who owns no less than 51% of the business and must be an engineer of the same type as the business’s activity
Apart from one of the core advantages of establishing a free zone –100% foreign ownership, a lot of investors opt for a free zone formation when considering the timeline procedures, costs, availability of the desired activity and required facilities for their companies. Free zones are well known for fast and easy registration and licensing process and provide cost-effective tailored solutions for all clients’ requirements.
There are 7 Emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Fujairah and Umm Al Quwain) and more than 40 free zones in the UAE, it is certain that each free zone offers exclusive benefits to its investors which leads to the question on ‘how to choose the right and suitable one for your business?’
Top 5 things to consider before choosing a free zone:
- Purpose of the company/ Activity to be deployed
- Lease facility requirements
- Number of Visa (s) required
- Budget for setting-up
The most common method to obtain a UAE residence visa in the free zone is to get an employment contract through one of the free zone companies – wherein the employee and employer shall enter into an agreement – which could either be unlimited or limited – based on the employer’s discretion. The UAE Residence Visa issued from a Free Zone are normally valid for 3 years (onshore visas are normally valid for 2 years).
Popular free zones include:
Dubai International Financial Centre (DIFC)
DIFC (www.difc.ae) is a global financial centre established in 2002, strategically located between the East and West, providing a stable and secure platform for businesses and financial institutions to tap into the emerging markets of the Middle East, Africa and South Asia.
Jebel Ali Free Zone Authority (JAFZA)
JAFZA (www.jafza.ae) is the largest and oldest free zone in the UAE, established in 1985. JAFZA is an engine for Dubai’s economic and industrial growth. It’s product offerings ensure that clients will find the right set-up for their needs including plots of land, warehouses, showrooms, customised development solutions, offices, retail outlets, a business park and even on-site residences.
Dubai Multi Commodities Centre (DMCC)
DMCC (www.dmcc.ae) is a government entity established in 2002 to enhance commodity trade flows through Dubai. DMCC is the dedicated global centre for more than 14,100 businesses from a wide range of industries and sectors.
Dubai Airport Free Zone Authority (DAFZA)
DAFZA (www.dafz.ae) is a well-established zone that deals with import and export trades and services, established in 1996. It offers companies a base within a modern and comprehensive environment to do business from.
Dubai Creative Clusters Authority (DCCA), formerly known as TECOM
The Authority (www.dcca.gov.ae) was launched in 2000 to establish Dubai as a worldwide hub for knowledge-based industries. The zone comprises 9 clusters catering to the needs of 7 creative and other knowledge-based industries – Media & Entertainment, Information & Communications Technology, Outsourcing, Higher Education, Human Capital Development, Life Sciences / Energy & Entertainment, Design
Dubai World Central (DWC) – Dubai South
DWC (www.dwcftz.com) is an emerging 145 sq km city situated within the emirate of Dubai, launched in 2006. The free zone’s economic platform supports every conceivable kind of business and industry. The free zone offers a wide variety of office solutions, ranging from shared facilities to executive offices that are perfectly aligned to the growing needs of start-ups and SMEs.
Abu Dhabi Global Markets (ADGM)
ADGM (www.adgm.com) is an international financial centre located in Al Maryah Island in the heart of the UAE’s capital city, Abu Dhabi. It’s legal and operational platform is attractive for a broad range of professional and business services, along with family businesses, corporate headquarters and various management functions. ADGM also provides a beneficial environment to domicile holding companies, special purpose vehicles (SPVs) and other structures to hold and protect assets.
ADPC – Khalifa Port and Industrial Zone (KPIZ)
KIZAD (www.kizad.com) is among the largest greenfield ports and industrial zones in the world, located near Khalifa Port in Abu Dhabi and has started its operation 2012. KIZAD offers proximity to suppliers, customers and other business competences, safeguarding that industrial, trade and logistics derive long-term advantage.
Masdar City Free Zone
Masdar City (www.masdarcityfreezone.com) was established in 2006 and is located near Abu Dhabi International airport, is an emerging global clean-technology hub, placing companies at the heart of the global renewable energy and clean tech industry. Setting up a business within this free zone offers entrepreneurs a wealth of benefits to include 100% foreign ownership as well as exemption from corporate taxes.
The Role of PRO Partner Group
As a leading company formation specialist in Dubai, PRO Partner Group act as a corporate partner for foreign investors wishing to establish a business in the UAE and assume the role of the 51% Emirati shareholder. Through PRO Partner Group’s secure and trusted nominee structure, this model ensures that foreign investors’ interests are protected in accordance with the law.
In the case of a Foreign Branch, PRO Partner Group can be employed as a local service agent to quickly and efficiently handle all governmental administration requirements, whilst still enabling the foreign investor to retain 100% financial and management control.
In common with much of the GCC, commercial law in the UAE states that a foreign investor cannot establish a mainland business entity without first appointing a local sponsor. The role of this local sponsor varies depending on the structure of the business, and as an inevitable challenge for foreign investors, it is vital to understand the functions of a local sponsor and the impact this has on establishing a business in mainland UAE.
Companies who wish to operate in mainland UAE are required to have a local sponsor. The type of sponsorship available depends on the type of business to be conducted by the company and therefore the legal business structure selected. There are three sponsorship options for a foreign investor wishing to set up a business in Dubai; individual sponsorship, corporate sponsorship, and local service agents.
Individual sponsorship is when an individual Emirati national sponsors the business, and by doing so, holds a 51% share of the company or acts as a National Service Agent if the business activity permits.
Corporate Sponsorship permits the local partner to be a 100% UAE-owned company. This allows for a far more robust governance structure to safeguard foreign investment. Local Service Agent is a type of sponsorship whereby the agents are appointed to act as a representative for businesses with 100% foreign ownership.
Greg Hastings is the Business Development Manager at PRO Partner Group. For further information on setting up a company in the UAE or any other queries, please contact Greg on firstname.lastname@example.org or call a member of the team on:
T: +971 (0)4 456 1761 (Dubai)
T: +971 (0)2 448 5120 (Abu Dhabi)
As a leading company formation specialist, #PROPartnerGroup act as a #CorporatePartner for #Foreign #Investors wishing to establish a business in the #UAE and assume the role of the 51% #Emirati #Shareholder https://t.co/KGKBZIW3i4
— PRO Partner Group (@PROPartnerGroup) July 23, 2018